City, county to announce arena financing details this morning

Originally published May 16, 2012 at 9:09 am

Updated May 16, 2012 at 3:50 pm

Seattle Mayor Mike McGinn, County Executive Dow Constantine and hedge-fund manager Chris Hansen are expected to announce Wednesday morning that they are sending legislation to the city and county councils to finance a new $490 million sports arena in Sodo.

Seattle Mayor Mike McGinn, County Executive Dow Constantine and hedge-fund manager Chris Hansen are scheduled this morning to announce details on two agreements between Seattle, King County and ArenaCo on financing a new, $490 million sports arena in Sodo.

City and county officials met late Tuesday in McGinn’s City Hall office to finalize what Sung Yang, Constantine’s chief of staff, characterized as a memorandum of understanding (MOU) that would be sent to the councils.

Hansen and city and county leaders initially proposed a memorandum of understanding to detail how the city and county would issue the construction bonds and how the investment group, led by Hansen, would repay them. A MOU would be less binding than an ordinance and potentially less of a guarantee of taxpayer financial commitment.

Some City Council members said that, over the past month, Hansen had asked that the legislation be in the form of an ordinance that would be more binding so that, if approved, he would be in a stronger position to lobby the National Basketball Association (NBA) for a team, according to City Hall sources.

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McGinn, Constantine and Hansen in February announced to cheers what they described as a “self-funding” proposal to build a new, 18,000-seat arena and entertainment venue to return professional basketball to the city. The plan also envisions attracting an National Hockey League team and hosting up to 200 events a year.

The city and county’s outlay of public money would be capped at $200 million. That would be repaid through rent and taxes generated by the arena.

The initial proposal included several measures to protect the public investment, including requiring the arena owners to make up any revenue shortfall, to require both teams to sign 30-year nonlocation agreements, to pay for upkeep and maintenance of the facility and to build up a financial reserve equal to three years of debt payment on the building.

Hansen said then that he hoped the respective councils would approve the memorandum by June, so he could take it to the NBA Board of Governors. But that timeline is unlikely with the councils only now receiving the detailed legislation and with in-depth financial analysis of Hansen’s proposal yet to be made.

“Our receipt of the documents is when the Council’s formal review begins. We want Mr. Hansen to be successful, but the Council has a duty to scrutinize the agreement carefully,” said City Council President Sally Clark, who had not seen the legislation and said she didn’t know what form it would take.

A citizen’s Arena Review Panel in April recommended that city and county leaders go forward with Hansen’s proposal. But the panel also cautioned that many questions remained, including a thorough vetting of the financial strength of the investment group and an analysis of the traffic impacts of a new arena.

The Seattle Mariners, the Port of Seattle and the Manufacturing Industrial Council all have questioned the Sodo location and its impact on the region’s $3 billion marine-cargo business.

Councilmember Richard Conlin said Tuesday that any agreement would have to include mitigation for impacts to freight mobility.

“We’re going to do a thorough review of the issues around transportation,” Conlin said. “We can’t proceed with an agreement that doesn’t address those issues and figure out a way to solve them.”

Times staff reporters Steve Miletich and Bob Young contributed to this report.